Build Back Better Act's Drug Inflation Rebates Would Reduce Premiums $111B Over Next Decade

An Urban Institute analysis found that The Build Back Better Act's drug inflation rebate provision would reduce premiums by $3 billion in 2023 and $21 billion in 2031.

The Build Back Better Acts provision to introduce inflation rebates on most prescription drugs would lower employer health insurance premiums by $111 billion over the next decade.

That's according to a new analysis by the Urban Institute and funded by the Robert Wood Johnson Foundation.

It found that The Build Back Better Act's drug inflation rebate provision would reduce premiums by $3 billion in 2023 and $21 billion in 2031.

That means premiums would fall by 0.4% in 2023 and 1.7% in 2031.

In total, the cost of premiums between 2022 and 2031 would be $111 billion less, with an average annual premium reduction of 1.1%.

The estimates assume employers' savings on insurance premiums are passed on to workers in the form of higher wages.

The researchers estimate higher wages consistent with Congressional Budget Office's revenue projections. If employer savings are not fully passed on to workers, premium savings would be larger.

"Approximately half of the people in America are covered by employer-sponsored health insurance," said Katherine Hempstead, senior policy adviser at the Robert Wood Johnson Foundation, in a statement. "Lowering the cost of prescription drugs lowers the cost of insurance premiums. That puts more money in the pockets of working families."